As we spoke about yesterday, a trading desk is a key player in the world of programmatic buying. We exist to optimise advertising budgets by reaching a large audience at a fair price across multiple devices.
But let’s go back to the basics: what exactly does a trading desk do?
Most of us are familiar with the idea of trading on Wall Street and what it means in the financial world, even if we don’t know the ins and outs of how it works. Hence, to understand the role played by digital trading desks, it may be useful to see it as the case of exporting the Wall Street business model and applying it to the advertising industry.
First off, the environment that a digital trading desk operates in is similarly fast-paced and competitive. Secondly, the concept of trading remains much the same but the commodity being traded here is online ad space and the people who see those ads.
How does the trading happen?
1. Publishers, in order to monetise their content, link their ad space to the buying ecosystem.
2. With the help of the trading desk, advertisers decide who they want to reach and which space would be the most effective to enable them to reach this audience.
(General rule of thumb: The more popular the space, the greater the price the client is keen to pay for it.)
The trading desk puts forward a price to bid for each space according to the people watching the content, the screen they are using and the support.
3. The auction takes place, with the one paying the most winning the space.
4. This entire process happens in under 250 milliseconds. This is incredibly fast, demonstrating that it is happening in real time, hence the name RTB (Real-Time Bidding).
This business model arose as a way to enhance publishers’ online ad space using data. This broke with traditional methods of online advertising. The reason why it is working so well is because advertisers now know their audience. It is no longer the case of them taking a stab in the dark. There has been a movement away from previous reliance on mass media, such as print and broadcasting, towards linking your message with specific people.
To provide you with an overview, there are basically 2 types of trading desks: agency trading desks and independent trading desks.
Agencies have incorporated the trading desk as part of the full range of services they provide to advertisers. Examples include Havas-Adnetik, Publicis-Audience on Demand and WPP-Xaxis. Their expertise in online advertising was relatively low and did not yield such results as someone who is specialised. As a result, advertisers wanted to move their trading in-house. Clients were therefore uncertain about the process and the possibility of being taken advantage of.
On the other end of the spectrum, we have the independent trading desks. An independent trading desk is a company specialising in trading, that is not directly related to a media agency.
The case for independent trading desks:
We are focused on online advertising, mastering our own technology, and helping advertisers embrace the digitalisation of their clients. As we are experts in our field, the decisions we make can drastically influence the placement and pricing of your advertising. The fact that we do not have to answer to a large holding company also prevents any conflict of interest. We focus solely on the buy-side. Furthermore, we offer greater visibility regarding price and data and ad serving by using an independent tracking device owned by Google. This demonstrates to our clients that we are helping them achieve their goals and assures them of the trust they can have in us.
Finally, as we are a company specialised only in trading, clients need not worry that they are paying us to both manage their ad campaign, as well as for our trading services.
Here’s the main takeaway: As an independent trading desk, the Media Trader is committed to transparency, cost-efficiency and re-establishing your control over your ad campaigns. Educating you about what trading desks do is what we see as the first step in this process. This is what differentiates us from other trading desks, whether they be independent or agency.